(Alliance News) - AO World PLC said on Monday its current financial performance and liquidity position are in line with expectations, after a press report over the weekend regarding its credit cover caused the stock to drop sharply.
Shares in the online electricals retailer were down 13% at 59.45 pence early afternoon on Monday in London, having reached a low of 55.05p earlier in the day. Over the past 12 months, shares have fallen 74%.
The Sunday Times reported that Atradius, a credit insurer, cut its credit cover for the online retailer's suppliers. Credit cover is crucial aspect of the retail supply chain. It provides cover for firms should customers not pay debts in time or at all.
AO confirmed in a statement on Monday that it was aware that one of the third-party credit insurers which provides credit insurance to some of its suppliers had rebased their cover in May with respect to AO, reflecting post-Covid sales levels.
This, the company explained, was a reduction from the heightened levels that had been in place and required through the pandemic.
AO said that, to date, this rebased cover has had no effect on its liquidity position, which remains in-line with the board's expectations for 2023, it added.
The company continued that progress in regard to the closure of its German operations has been "encouraging", with total cash costs of closure now expected to be towards the lower end of its original estimates of nil to GBP15 million.
AO added it continues to have full access to its GBP80 million revolving credit facility and is still considering and implementing a number of ongoing initiatives and further actions to strengthen its balance sheet.
By Heather Rydings; heatherrydings@alliancenews.com
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Ao World (AO.)